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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents the U.S. and foreign components of earnings before income taxes and the related income tax expense (in thousands):
Years Ended December 31,
202120202019
Earnings before income taxes:
United States$200,657 $154,788 $142,410 
Foreign91,900 73,664 69,306 
$292,557 $228,452 $211,716 
Income tax expense:
Current:
U.S. Federal$29,478 $38,732 $20,254 
U.S. State and local7,391 8,203 5,457 
Foreign24,485 22,123 19,180 
61,354 69,058 44,891 
Deferred:
U.S. Federal11,104 (10,048)9,180 
U.S. State and local3,239 (1,779)1,210 
Foreign(2,485)(1,419)(2,972)
11,858 (13,246)7,418 
$73,212 $55,812 $52,309 
The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate and our income tax expense (dollars in thousands):
202120202019
Statutory federal income tax rate$61,437 
21.0%
$47,975 
21.0%
$44,460 
21.0%
State income tax expense, net of federal income tax benefit
10,666 
3.6
6,280 
2.7
7,239 
3.4
Audits and adjustments, net2,131 
0.7
662 
0.3
2,556 
1.2
Change in valuation allowances1,317 
0.5
476 
0.2
(2,739)(1.3)
Foreign income taxed at different rates4,308 
1.5
3,825 
1.7
4,024 
1.9
Research and development credits(4,352)
(1.5)
(1,858)
(0.8)
(5,438)
(2.6)
Other, net(2,295)
(0.8)
(1,548)(0.7)2,207 
1.1
Effective tax rate$73,212 
25.0%
$55,812 
24.4%
$52,309 
24.7%
On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic, which included, among other things, provisions relating to net operating loss carrybacks and other beneficial income tax changes. In 2020, we recorded a tax benefit of approximately $1,712,000 related to the CARES Act, which was reflected in our effective tax rate reconciliation in ‘Other, net’.
As of December 31, 2021, we have accumulated undistributed earnings generated by our foreign subsidiaries, most of which have been taxed in the U.S. as a result of the Tax Cuts and Jobs Act of 2017. For foreign subsidiary earnings not yet taxed under these provisions, we continue to assert permanent reinvestment of earnings earned in foreign jurisdictions which impose a withholding tax on dividends and, accordingly, have not accrued any additional income or withholding taxes on the potential repatriation of these earnings. At the present time, given the various complexities involved in repatriating earnings, it is not practicable to estimate the amount of tax that may be payable if these earnings were not reinvested indefinitely.
The significant components of deferred tax assets and liabilities are as follows (in thousands):
December 31,
20212020
Deferred tax assets:
Net operating losses$25,791 $27,453 
Foreign tax credits13,518 16,027 
Other27,445 25,786 
Gross deferred tax assets66,754 69,266 
Valuation allowances(36,948)(40,098)
Total deferred tax assets29,806 29,168 
Deferred tax liabilities:
Goodwill and other intangibles(49,987)(48,831)
Property and equipment(19,351)(6,715)
Other(1,852)(2,540)
Total deferred tax liabilities(71,190)(58,086)
Net deferred tax liabilities$(41,384)$(28,918)
The net non-current deferred tax assets and liabilities are as follows (in thousands):
December 31,
20212020
Net non-current deferred tax assets, which are included in "Other assets"
$5,689 $4,291 
Net non-current deferred tax liabilities(47,073)(33,209)
Net deferred tax liabilities$(41,384)$(28,918)
As of December 31, 2021, we have U.S. state net operating loss carryforward (“NOLs”) that will expire between 2021 and 2040. We also have foreign NOLs of $93,771,000, certain of which will expire between 2022 and 2027, while the majority have no expiration date. Certain state NOLs relate to pre-acquisition losses from acquired subsidiaries and are subject to annual limitations as to their use under the provisions of Internal Revenue Code Section 382.
We have provided valuation allowances for certain of our deferred tax assets where we believe it is more likely than not that the related tax benefits will not be realized. At December 31, 2021 and 2020, our valuation allowances totaled $36,948,000 and $40,098,000, respectively, relating primarily to state and foreign NOLs and foreign tax credits. Changes to our valuation allowance for the year ended December 31, 2021 were driven by the expiration of foreign tax credits and changes in our foreign and state NOLs.
As of December 31, 2021 and 2020, we had approximately $12,664,000 and $10,546,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $1,250,000 and $749,000, respectively, related to accrued interest. The changes in the unrecognized tax benefits balance during the year reflect additions for tax positions taken in prior and current periods, net of reductions related to audit settlements and statute expirations.
In the future, if recognized, the liability associated with uncertain tax positions would affect our effective tax rate. We do not believe there will be any changes over the next 12 months that would have a material effect on our effective tax rate.
We are currently under audit in various jurisdictions for tax years 2015 through 2019. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that the examination phase of these audits may be concluded within the next 12 months which could significantly increase or decrease the balance of our gross unrecognized tax benefits. However, based on the status of the various examinations in multiple jurisdictions, an estimate of the range of reasonably possible outcomes cannot be made at this time, but the estimated effect on our income tax expense and net earnings is not expected to be significant.
In the U.S., federal income tax returns for years subsequent to 2015 remain open to examination. For state and foreign jurisdictions, the statute of limitations generally varies between three and ten years. However, to the extent allowable by law, the tax authorities may have a right to examine and make adjustment to prior periods when amended returns have been filed, or when net operating losses or tax credits were generated and carried forward for subsequent utilization.